Regulators Penalize US Bancorp for Identity-Theft Products

WASHINGTON—Federal regulators fined U.S. Bancorp $9 million and required it return $48 million to customers over “illegal billing practices” related to the bank’s identity-theft products.

The Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau on Thursday said U.S. Bancorp customers were unfairly charged for certain products, including identity theft and credit-monitoring, whose full benefits they didn’t receive.

The customers were signed up without their consent and in many cases didn’t actually receive the promised service, according to the government.

U.S. Bancorp said “we regret that errors occurred” and that the problems were related to a vendor, Affinion Group. The bank terminated its relationship with the vendor when it learned of the issues, the statement said.

A spokesman for Affinion Group said the company has made changes that addressed the cause of the problem and regulators’ concerns. The vendor was also involved in similar enforcement actions against Capital One Financial Corp. and

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U.S. Bancorp said the regulatory problems wouldn’t impact its third-quarter earnings because they were “accrued for in previous quarters.”

Thursday’s action is the latest in a series of regulatory actions related to credit cards and add-on products. The CFPB said it levied penalties against seven other banks, including $727 million in customer refunds agreed to by Bank of America this past spring. In that case, the fine was related to products that were supposed to protect customer credit in the event of a hardship like unemployment or disability.

“We have consistently warned companies about practices related to add-on products and we will do what is necessary to prevent further harm to consumers,” CFPB Director

Richard Cordray

said in a written statement.

Minneapolis-based U.S. Bancorp will reimburse 420,000 customers. Regulators said some customers were charged for services they didn’t receive or agree to, and as a result ended up paying interest charges or fees for exceeding their credit limit. The problems occurred between February 2003 and August 2012, when the bank terminated the vendor relationship, regulators said.

The bank also agreed to improve its oversight of third-party vendors.

The Affinion spokesman said the company’s identity-theft protection product used to require customers to proactively submit more information in order to receive all of its services. Now, the company obtains “the required authorizations upon enrollment to our service, which allows consumers immediate access to their credit reports and credit monitoring,” he said.

In a speech in Arlington, Va. on Tuesday, U.S. Bancorp Chief Executive

Richard Davis

likened his firms’ efforts to comply with new regulations to the evolution of an airline company, asking regulators to be patient and give credit for “intent and progress.”

“We are no longer baggage handlers” who can afford to make a mistake and occasionally lose a piece of luggage, he said. “We are pilots.”

More Reading: CFPB Says Card-Fee Problems Persist

Write to Ryan Tracy at

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